So I understand the benefits of buying a house to raise a family in; a place that you can live in when you retire and no longer have to make mortgage payments on; a place where you have a nice sized yard and can do whatever you want to the house since you own it.
However with a condo all those benefits are essentially gone--in a 1/2br place you're probably not going to be raising 2-3 kids in it, you probably don't have a huge yard to build a pool in if you want to, and if you're say in your mid-late 20s or early 30s and single, it likely isn't the last place you'll ever live.
Essentially then someone in my position, a 26 year old single guy, if I wanted to buy a condo I'd be borrowing a huge sum of money at a 4.5-5% rate to live in a place that'll appreciate at 2-3%, which would be considered lucky in downtown San Diego where condos are completely oversaturated.
Currently I'm renting out a 2br condo in San Diego with a roommate in downtown San Diego, and together we pay $1800. The list price for other places in this building is around $450k, so if I actually wanted to buy this place, and make a down payment of something like $100k (just over 20%), a 30-year mortgage for $350k @ 4.5% means monthly payments of just around $1800, PLUS HOAs which in this area is $400+, along with insurance, and maintenance fees..meaning I would lose extra money every month AFTER my $100k down payment.
If I had taken that $100k and put it into some sort of stock fund, which even these days aren't doing well, and get say a 4.5% return on it, along with the $400 extra I'd be paying on my mortgage in HOAs (I'll reduce insurance/other fees in rent increases), in 8 years that's $90,000+ I'd be getting back.
And the place at $450k, assuming 2.5% appreciation (which I think is generous), after 8 years would be worth: $548,281, so the place would be barely have appreciated more than my other investment would've, and I'd still barely own a fraction of the place up until that point.
So as a single guy in an area where housing has seen better days (which I assume holds true for many metro places), and will likely, and hopefully never see 5-10%+ annual appreciation rates, and as someone who'll eventually move to a house, what benefits are there at all of owning a condo?
However with a condo all those benefits are essentially gone--in a 1/2br place you're probably not going to be raising 2-3 kids in it, you probably don't have a huge yard to build a pool in if you want to, and if you're say in your mid-late 20s or early 30s and single, it likely isn't the last place you'll ever live.
Essentially then someone in my position, a 26 year old single guy, if I wanted to buy a condo I'd be borrowing a huge sum of money at a 4.5-5% rate to live in a place that'll appreciate at 2-3%, which would be considered lucky in downtown San Diego where condos are completely oversaturated.
Currently I'm renting out a 2br condo in San Diego with a roommate in downtown San Diego, and together we pay $1800. The list price for other places in this building is around $450k, so if I actually wanted to buy this place, and make a down payment of something like $100k (just over 20%), a 30-year mortgage for $350k @ 4.5% means monthly payments of just around $1800, PLUS HOAs which in this area is $400+, along with insurance, and maintenance fees..meaning I would lose extra money every month AFTER my $100k down payment.
If I had taken that $100k and put it into some sort of stock fund, which even these days aren't doing well, and get say a 4.5% return on it, along with the $400 extra I'd be paying on my mortgage in HOAs (I'll reduce insurance/other fees in rent increases), in 8 years that's $90,000+ I'd be getting back.
And the place at $450k, assuming 2.5% appreciation (which I think is generous), after 8 years would be worth: $548,281, so the place would be barely have appreciated more than my other investment would've, and I'd still barely own a fraction of the place up until that point.
So as a single guy in an area where housing has seen better days (which I assume holds true for many metro places), and will likely, and hopefully never see 5-10%+ annual appreciation rates, and as someone who'll eventually move to a house, what benefits are there at all of owning a condo?
Last edited:
Facebook
Twitter